Car buyers need certainty - not rushed policy

28th May, 2008

The peak body representing the Australian automotive industry, the Federal Chamber of Automotive Industries (FCAI), has urged the Federal Government not to proceed with the proposed increase in the rate of the so-called Luxury Car Tax.

As reports in the media today suggest, this issue should indeed be referred to the review of tax policy, headed by Treasury Secretary Ken Henry.

"The increase announced in the Federal Budget is bad policy and is unnecessary, the tax on so-called ‘luxury’ vehicles is a distortion within the taxation system," FCAI Chief Executive Andrew McKellar said.

"Anyone buying a new car already pays more than enough tax, they pay GST, stamp duty, registration and taxes on the fuel they use - they do not need this extra burden," he said.

The threshold for the tax is currently set just above $57,000 but because this includes the GST, many cars with a significantly lower base-price are affected by the tax.

"The impact of this tax has expanded over time because the threshold has not kept pace with changes in the market," Mr McKellar said.

"If this trend continues, many more vehicles will be captured by the tax in the future and increased numbers of family vehicles will face the additional tax," he said.

If the planned tax increase is to be reviewed, the Treasurer must urgently clarify what the situation is for new car buyers.

"When people walk into a showroom in the next few weeks, they need to know if they will be forced to pay extra tax on their new car," Mr McKellar said.

The automotive industry urges the Federal Government not to rush through this proposed tax increase.

"I call on the Government to avoid the damage this tax rise will cause and begin consulting with the industry and motorists," he said.

For further information contact:
Sheena Ireland, Communications Manager
P: 02 6229 8221
M: 0458 038 555
E: sheena.ireland@fcai.com.au

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